BusinessCompany NewsWorldCom fraud victims to get £306m

WorldCom fraud victims to get £306m

A provisional settlement between the US Securities & Exchange Commission and WorldCom (now known as MCI) will see the telecom pay a record fine of $500m (£306m).

Link: MCI close to settlement with SEC

This money, which must still be approved by the district court hearing the SEC’s action as well the bankruptcy court handling WorldCom’s bankruptcy, will be distributed to victims of the company’s $9bn accounting fraud.

The total fine is actually $1.5bn, but as a result of the company’s bankruptcy case, the SEC has agreed that $500m will be satisfactory.

The SEC case against WorldCom was based on the allegation that the company misled investors by overstating its income from ‘at least as early as 1999 through the first quarter of 2002’.

WorldCom later admitted that improper accounting had led it to overstate revenues in its financial statements by approximately $9bn.

A settlement with the SEC is a key component to MCI emerging from Chapter 11 bankruptcy protection.

The SEC fraud investigation into WorldCom continues.

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